- The Washington Times - Wednesday, September 5, 2001

President Bush yesterday said Democratic charges that he is raiding the Social Security trust fund to pay for his popular tax cut are "ridiculous," as both sides ramped up their rhetoric for the looming budget showdown in Congress.

Mr. Bush said Democrats are employing scare tactics to sell an increase in federal spending, despite a budget resolution that calls for fiscal discipline.

"I understand how politics works up here. There's always that scare tactic, trying to tell the American people that the budget process is going to lead them to not get their Social Security check. That's just ridiculous. It's just not right," Mr. Bush said before meeting privately with Senate Republican Leader Trent Lott of Mississippi.

The president postulated a simple syllogism about Democrats that recalls the old adage "If you're not with us, you're against us."

"Some are arguing that maybe we ought to roll back the taxes. They're now against tax relief. And if you're against tax relief, it must mean you're for maybe rolling it back. I think that would be terrible for the economy. Most Americans understand that as well," he said.

Democrats continue to blame the tax cut — which returned surplus money to taxpayers after Congress set its spending targets for next year — for the flagging economy.

"We've lost 250,000 jobs now in the last four months," Senate Majority Leader Tom Daschle said after meeting privately with the president. "And so we're very concerned about working families who no longer have jobs, who are out of work, and very concerned about their future.

"Obviously that leads to the second concern, which is the impact that the slowness in the economy and, in our view, the tax cut is having on the budget. Our view is that the tax cut is in large measure the reason why, over the next several years, we are threatened in terms of the real possibility that we could be in Social Security and using the trust funds."

Mr. Daschle offered no solutions of his own for aiding the economy while holding down federal spending, instead saying Democrats are looking to Mr. Bush to solve the problem because "we didn't agree to that budget."

"I think any president owes it to the country and to the Congress to give its guidance on how you maneuver through the fiscal obstacles that in large part you're responsible for," the South Dakota Democrat said.

Both sides are gearing up for what increasingly appears to be a showdown over budget priorities. For the past two days, Mr. Bush has repeatedly said the nation's revenue will more than cover increases in federal programs, as long as Congress holds the line on new spending.

Some Republicans joined Mr. Bush in criticizing Democrats.

"This absurd criticism the Democrats are making that somehow it's the president's fault that the economy is down — it just won't bear up under scrutiny," said Sen. Phil Gramm, Texas Republican. "And this complaint about the surplus — I mean, these are the same people that for the next three months are going to be screaming for more spending. I don't understand how politically they can possibly gain from what they're doing."

Mr. Gramm said the tax cut was the right solution at the time, but that the economy now may need some additional stimulus, such as a cut in the capital gains tax.

"We need to cut the capital gains tax rate. That would help the market, it would help business, it would help the economy, it would put more revenues in the coffers for the next two or three years," he said.

Mr. Bush said he was "open-minded" about a capital gains tax cut but suggested he first wanted to see how the economy responded to general tax cuts he pushed through Congress.

Republican congressional leaders, including Mr. Lott, have been discussing a proposed reduction in the capital gains tax on the sale of investments like stocks, bonds and real estate to 15 percent from the current 20 percent. The reduction would be done for a two-year period with the aim of stimulating investment and generating a quick flood of new tax revenues.

Congressional Budget Office Director Dan Crippen took steam out of both parties' arguments, testifying yesterday that the tax cut enacted this spring would have little effect, either on the recovery from the recent economic slowdown or the long-term fiscal crisis Social Security faces.

Mr. Crippen said that with consumer spending the one high point of the economy, "anything that does help that part is useful." But he said there is no way feasibly to store up resources in the Social Security trust fund. "The economy, hopefully, will be the trust fund," Mr. Crippen said.


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